The findings of the research open avenues for research to understand the relationship between corporate governance variables and financial performance in the South African long-term insurance sector. The paths for further research arise from the results and research design.
The results can lead to further research to determine the number of board members and the level of leverage that will optimise the financial performance of long-term insurance providers in South Africa. The research would provide empirical evidence to implement the second and third policy recommendations made by the dissertation respectively. Additionally, a study that uses financial and operational leverage to investigate their relationship with financial performance can be carried out. A study in this area would provide better information required to implement the third recommendation made by the dissertation. Further, the KPMG long-term insurance industry survey which showed the four companies controlling 94% of the assets in its 18 companies, and the finding of Boakye (2018) that the industry is only 21% efficient, suggests a study similar study to the one carried out by Alhassan, Addison and Asamoah (2015) may need to be carried out in South Africa. The purpose of such a study would be to get policy-makers to understand the structure of the long-term insurance industry in order for them to put
in place adequate policies to improve the efficiency of the industry without reducing its profitability.
Research design leads to further research to determine the impact of the application of the guidelines of the King Report IV in South Africa's long-term insurance sector and how corporate governance variables affect a company's profit efficiency. A study to conduct the first path described would involve a cross-border comparison of the relationship investigated in this dissertation by using a country that has no formal corporate governance framework and South Africa. The results from such a study would have a higher accuracy because it mimics a randomised control trial where the South African countries are the control group. The second path described would involve the creation of a profit efficiency score by using a DEA and entailing a regression of the score against corporate governance variables. The results from such a study would provide a nuanced view of the relationship between corporate governance and financial performance in South Africa's long-term insurance sector because it analyses drivers for the change in profitability. To overcome the limitation of the small sample size faced in this study, future research should request the annual reports from a larger sample of FSB-accredited long-term insurance companies.
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APPENDIX
List of Sampled Long-term Insurance Companies Name of Company
Alexandre Forbes Clientele Life Assurance Discovery Hollard Liberty Life MMI Holdings* Old Mutual Sanlam
*The consolidation of Momentum and Metropolitan Insurance that are registered separately with the Financial Services Board